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Foolish Forecast: Jack Daniel's Holds Its Own

Views you can use to get clues on the news.

Brown-Forman (NYSE:BF-B)(NYSE:BF-A), owner of the iconic Jack Daniel's whiskey and a wide array of other brands of spirits, comes up to the bar on Thursday with its first-quarter earnings release. Here's what to expect.

What analysts say:

Buy, sell, or waffle? Nine analysts currently follow the company. Six recommend you drink in the stock; two suggest you simply hold on to it; one is bearish.

Revenue. Analysts are projecting $747.5 million in first-quarter sales, or approximately 17% more than last year's second-quarter sales amount.

Earnings. Analysts see quarterly earnings of $0.82, for a year-over-year gain of almost 8%.

What management says:Back when Brown-Forman released fourth-quarter results, management said it expected full-year diluted earnings growth of 8%-13%, excluding "transition-related costs" to integrate last year's acquisition of Casa Herradura.

What management does:The company possesses a favorable mix of steady sales growth, cash flow generation, and double-digit net profit margins. Profitability trends have dipped lately but include a number of charges related to acquisitions and the company's sale of its Hartmann luggage, Lenox crystal, and Brooks & Bentley jewelry businesses.

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:From here on out, alcohol will drive Brown-Forman, as it has successfully sold its non-liquor operating segments. As a result, the company, along with Britain-based Diageo (NYSE:DEO), is among a select group of pure-play spirits firms. Better yet, it is geared to the premium segment of the industry, which is witnessing very favorable growth and profitability trends as consumers increasingly pay up for high-end liquor brands. Fortune Brands (NYSE:FO) is also benefiting from the move to more expensive libations, although it possesses some unfavorable home-product exposure.

Current consumer trends favor the above firms, which is working to the detriment of beer-based firms such as Anheuser-Busch (NYSE:BUD), SABMiller, and Molson Coors (NYSE:TAP). Overall, though, a handful of key players dominate the beverage industry, which makes the economics appealing and means Fools may want to consider drinking in the companies when favorable valuations arise.

Fool contributor Ryan Fuhrmann is long shares of Diageo but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.